In February 2020, the unemployment rate in the U.S. was a paltry 2.5%. Fast forward to May 2021, and we have experienced an increase of almost 250% — or a 6% national unemployment rate. You would assume that after everything the restaurant industry has been through the last 14 months, it may be hard to imagine facing another crisis. However, the current labor market is difficult enough to cause panic among many restaurant owners — and for legitimate reasons.
Businesses everywhere are trying to hire and finding that the tools they successfully used in the past aren’t helping to staff their restaurant anymore. In our experience at Penn Station East Coast Subs, we are finding many franchisees and other business owners trying to solve the labor crisis with solutions that seemed obvious a few years ago. However, with the government opening the checkbook in record amounts, we can’t solve today’s problems with old standards. So, how do we overcome yet another point of adversity?
Increase wages.
Photo: Craig Dunaway
This may seem like the most obvious and impossible solution, but it’s the best option for most restaurants. Capitalism has an astute way of solving the labor problem. Meaning, at some financial price point per hour, prospective employees are willing to work. I’m amazed and perplexed at the number of owners who simply refuse to acknowledge that today’s worker will not accept $9 or $10 per hour. Raise your hourly wages to a competitive level now to get through the next three or four months. Spend money on your team today, and it will come back in spades down the road.
Maintain your hours of operation.
You cannot solve the labor crisis by reducing the hours of operation. Exaggerating the point — what if you simply did not open your doors? Labor crisis resolved, right? You wouldn’t make any money, but you wouldn’t have to deal with staffing. Those who are willing to work want to work as much as they can. Cutting hours hurts their bank account and might just force them to seek employment elsewhere. While it’s very challenging to find employees right now, you have to operate as close to normal hours as possible to maintain your customer base, continue to bring in revenue and give additional hours to your team members.
Be flexible with distributor and supplier deliveries.
The labor crisis is affecting distributors and food suppliers as well. This means on-time delivery schedules are much more challenging. Do not turn away any delivery, regardless of time, even if it is during your lunch or dinner rush. It isn’t the driver’s fault the company is short-staffed. At the end of the day, working with your suppliers to develop a mutually beneficial, positive relationship is always a best practice.
Maintain high performance standards.
Continue to conduct performance evaluations on the same routine basis as always. An ownership mentality instilled from the top to the bottom and an independent evaluation performed by area representatives are two of the many pillars of success in the Penn Station system. We strongly believe this independent set of eyes allows managing owners and general managers to compare their operations with our standards, their peers, and as importantly, with past performance, which leads to higher performing restaurants. In the long term, maintaining high standards not only allows you to survive, but it will ultimately put even more distance between you and your competition.
Evaluate the prices you charge.
Unfortunately, inflation is upon us. While it may not last forever, the requirement to pay more for labor, supplies and delivery all means potentially less margin. Fortunately, this problem is not unique to your business, but a challenge to everyone. Evaluate the prices you charge for your product or services now. Consumers are experiencing this from the gas pump to the grocery store, and as cities and states reopen, you can almost be assured they’ll expect it from the brands they frequent.
While the labor market is challenging right now, it’s important to take a step back and remember all restaurants have been through recently. If you’re still open, you’ve already overcome more than a year of huge challenges. Today, we know the enemy we are facing, and the uncertainty of the beginning of the pandemic is leveling off. With the right response, restaurants can create even greater opportunities.
